History of the World Bank, includes personal comment

Essay by mquirosCollege, UndergraduateA+, December 1996

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The WB was created by the Bretton Woods Conference and evolved by adding additional institutions as additional tasks were identified. The initial objective of the WB was to provide loans for the rebuilding of Europe after WWII, later lending is provided to developing countries to foster development. Membership in the IMF is a prerequisite to be member of the WB and the source of the funds it provides are membership subscription quotas, international capital market borrowing (bonds), repayment of loans and retained earnings.

The institutions that form the WB group today are: 1. IBRD (International Bank for Reconstruction and Development), 2. EDI (Economic Development Institute), 3. IFC (International Finance Corporation), 4. IDA (International Development Association), 5. MIGA (Multilateral Investment Guarantee Agency) and 6. ICSID (International Center for Settlement of Investment Disputes).

The IBRD was created in 1946 for two purposes: the reconstruction of Europe after WWII and for investment in the developing world.

The initial priority (reconstruction of Europe), ends in 1955 and all lending to Europe ends in 1967 and doesn't resume until 1989 with assistance to Central and eastern Europe. Investment in the developing world is done by lending for projects unable to attract private financing, neoliberal philosophy is followed to decide what is considered economic development. The IBRD is the largest source of development assistance.

The IBRD is an official or sovereign lender and operates as a bank, not an aid-giving agency, It is very conservatively managed and it has a very profitable operation. Before extending a loan, a very rigorous economic and financial analysis of the proposed project is done so that a targeted ROI of 10% is met. The actual average ROI of the IBRD is about 20% although nearly 2 out of each 5 projects fails the 10% ROI. One...